Correlation Between American Funds and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both American Funds and Bny Mellon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Funds and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Bny Mellon Income, you can compare the effects of market volatilities on American Funds and Bny Mellon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Funds with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Bny Mellon.
Diversification Opportunities for American Funds and Bny Mellon
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Bny is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Bny Mellon Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Income and American Funds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Funds American are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Income has no effect on the direction of American Funds i.e., American Funds and Bny Mellon go up and down completely randomly.
Pair Corralation between American Funds and Bny Mellon
Assuming the 90 days horizon American Funds is expected to generate 1.13 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, American Funds American is 1.21 times less risky than Bny Mellon. It trades about 0.17 of its potential returns per unit of risk. Bny Mellon Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 768.00 in Bny Mellon Income on September 1, 2024 and sell it today you would earn a total of 115.00 from holding Bny Mellon Income or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Bny Mellon Income
Performance |
| Timeline |
| American Funds American |
| Bny Mellon Income |
American Funds and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Bny Mellon
The main advantage of trading using opposite American Funds and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Bny Mellon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bny Mellon will offset losses from the drop in Bny Mellon's long position.| American Funds vs. Gmo High Yield | American Funds vs. Blackrock High Yield | American Funds vs. Virtus High Yield | American Funds vs. Pioneer High Yield |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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